Preliminary Results

NWF Group PLC 14 August 2007 Embargoed until 07.00, on 14 August 2007 NWF GROUP PLC ('NWF', 'The Company' or 'The Group') PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 NWF Group plc ('NWF'), the diversified sales and distribution business, today makes the preliminary announcement of its audited results for the year ended 31 May 2007. Commenting on the results, Mark Hudson, Chairman, said: 'In this, my first statement as your new Chairman, I am delighted to report another good year for NWF in which all four businesses developed strongly.' Commenting on the outlook for the current year he added: 'There is no doubt that the prolonged wet weather of this summer has had adverse effects on both our garden products trading and on the prices of feeds raw materials. However, looking at the year as a whole, we are confident of continuing our growth and will in particular have built up the turnover of our new distribution warehouses.' Financial Highlights (comparative figures for year to 31 May 2006): • Turnover increased by 9% to £320 million (2006: £293 million) • Pre tax profit before goodwill amortisation up 7% to £6.4 million (2006: £6.0 million) • Pre tax profit increased by 7% to £5.9 million (2006: £5.5 million) • Basic earnings per share were 41.2p (2006: 41.7p) • Full year dividend per share increased by 8% to 19.4p (2006:18.0p) • Initial use of new warehouse development Divisional Highlights: • Distribution - turnover down 1% to £27.0 million (2006: £27.2 million) due to a major customer change with construction and first use of one of the three new warehouses at Wardle in May. • Feeds - volumes exceeded 500,000 tonnes, a 12% increase on 2006, turnover up 13% to £81.5 million (2006: £71.9 million), record year with continuing growth and efficiency. • Fuels - operating profit up 11% to £3.1 million (2006: £2.8 million) best ever performance under tough market conditions with growth in market share. • Garden Centres - turnover up 38% to £21.5 million (2006: £15.6 million), operating profits up 130% to £0.7 million (2006: £0.3 million), six destination sites in operation by the end of the year. Graham Scott, Chief Executive, further added: 'This has been another satisfactory year of development for the Group. We have seen a year of significant investment, mainly in revenue generating fixed assets and we have continued to lay foundations for further growth, which will emerge as we fill our new capacities in several areas.' For further information please visit www.nwf.co.uk or contact: Graham Scott, Chief Executive John West Paul Grundy, Finance Director Clemmie Carr NWF Group plc Tavistock Communications Tel: 01829 260 260 Tel: 020 7920 3150 NWF Group plc Chairman's Statement 2007 Highlights • Turnover up 9% to £320m (2006: £293m) • Pre-tax profit before goodwill amortisation up 7% to £6.4m (2006: £6.0m) • Pre-tax profit up 7% to £5.9m (2006: £5.5m) • Basic earnings per share 41.2p (2006: 41.7p) • Full year dividend per share up 8% to 19.4p (2006: 18.0p) • Initial use of new warehouse development In this, my first statement as your new Chairman, I am delighted to report another good year for NWF in which all four businesses developed strongly and in which our market capitalisation has exceeded £100 million for the first time. Turnover increased by 9% from £293 million last year to £320 million. Operating profit was 5% higher at £7.1 million (2006: £6.7 million). This result would have been higher but for the temporary loss of Distribution business at one warehouse earlier in the year and for the poor weather for Garden Centres in the last month of the financial year. Profit before taxation before goodwill amortisation was £6.4 million (2006: £6.0 million) and reported profit before taxation was £5.9 million (2006: £5.5 million). The weighted average number of shares in issue during the year was increased by the 1 million share placing mid way through the previous year. This has been invested in fixed assets which have yet to be taken into fully profitable use, resulting in a marginal reduction in basic earnings per share to 41.2p (2006: 41.7p) Cash flows and funding The Group generated £12.0 million (2006: £9.1 million) net cash from operating activities and the net cash outflow before financing was £16.0 million (2006: £1.9 million). Uses of funds included £20.0 million of net capital investment (2006: £2.7 million) and £3.5 million in acquisition payments (2006: £4.1 million), including deferred payments of £1.8 million (2006: £1.0million) relating to previous transactions. Interest cover (excluding FRS17 finance cost) was 5.7 times (2006: 6.2 times) and year end gearing was, as planned, higher than historic levels at 97% (2006: 46%). Dividend We propose a final dividend per share of 14.5 pence (2006: 13.4 pence) which will bring the total for the year to 19.4 pence (2006: 18.0 pence), an increase of 8% and which equates to dividend cover of 2.1 times (2006: 2.2 times). Subject to shareholder approval, the final dividend will be paid on 1 November 2007 to shareholders on the register at the close of business on 24 August 2007 and the shares will trade ex dividend on 22 August 2007. Divisional overview The main activity for Distribution was the construction and first use of the three new warehouses at Wardle which will be the driver for further profitable business in the future. In Feeds, a record result was achieved under the adverse conditions of high world commodity prices, by continuing growth and efficiency. Fuels also turned in a best-ever performance under similar conditions of high product prices by increasing its market share. The Garden Centre division ended the year with six large destination sites and with a much improved performance compared to 2006. Acquisitions and investments The sole operating company acquisition in the year was that of Browns of Burwell Ltd, a fuel distributor in Suffolk which was acquired in July 2006 for £1.4 million. The major capital investments in the year have been £14.9 million in the new Distribution warehouses and their ancillary infrastructure and £3.7 million in the new Garden Centre at Ashton Park in East Manchester, following the purchase of Arthur A Gent & Sons Ltd (a dormant company holding a lease and planning permission) in July 2006 for a net consideration of £0.4 million. Board changes Shareholders will join me in reiterating our thanks to Roy Willis, who retired at the 2006 AGM after nine years as your Chairman and service as a Director since 1980. We look forward to welcoming Richard Whiting, who will join us on 1 October 2007 to succeed Graham Scott on his retirement as Chief Executive of the Group. Richard joins us from Heywood Williams plc where he was Group Finance Director. Outlook for the current year There is no doubt that the prolonged wet weather of this summer has had adverse effects on both our garden products trading and on the prices of feeds raw materials. However, looking at the year as a whole, we are confident of continuing our growth and will in particular have built up the turnover of our new distribution warehouses which are expected to be fully operational in the summer of 2008. My thanks go to all who have supported NWF through the year both inside and outside the company. I look forward to updating shareholders on the Group's progress at the time of the Annual General Meeting in October. Mark Hudson Chairman 14 August 2007 Chief Executive's Review This has been another satisfactory year of development for the Group, with profit before tax before goodwill up by 7.5% to £6.4 million (2006: £6.0 million) on turnover of £320.4 million, an increase of 9.4% on £292.9 million last year. Three of the businesses improved their profits over 2006 while the fourth, Distribution, suffered from a well-publicised customer loss which was replaced within the year but nevertheless caused a profit downturn in 2007. We have continued to lay foundations for further growth within the Group, which will emerge as we fill our new capacities in several areas. We have seen a year of significant investment, mainly in revenue generating fixed assets, with a 10.1% increase in overall net assets to £30.4 million (2006: £27.6 million). There has been a predicted rise in interest costs and gearing, which will continue in the short term as revenues and profits from these investments gradually build to planned levels. Distribution This has been an exceptionally busy year for Distribution. The warehouse investment project at Wardle has dominated the year and the first of the three new warehouses was taken into use in May in line with our mid-year update. The other two will be commissioned in the course of the summer. The rate of acquiring new business is in line with our previous expectation of filling all 60,000 new pallet places by the end of May 2008. A major customer at Deeside, HP Foods, was acquired by Heinz and its logistics taken in house by the new owner. The space was taken by Typhoo Tea but not before several months of excess capacity had elapsed. The year's turnover was consequently down, by 1% from £27.2 million to £27.0 million and operating profits fell by 32% from £2.1 million to £1.4 million. Profits were also affected, as expected, by various start-up costs associated with the new development. Feeds Feeds moved forward again on total volumes which exceeded 500,000 tonnes for the first time, increasing by 12% over last year in a market for ruminant feeds which was around 7% larger in the same period. Much of the market growth was in blends, a segment in which we saw a 26% increase. Turnover was 13% up, reflecting the effect of the higher priced raw material base, at £81.5 million compared to £71.9 million last year. Operating profit reached a new record for the division at £1.9 million (2006: £1.5 million), up by 21%. We were particularly pleased by a strong performance in the South West, an area that we only entered less than three years ago, making NWF a national player in this market. We will create further blends and raw material storage capacity at Wardle in time for winter 2007/08. Fuels The Fuels business added another record year to its string of year-on-year improvements. Despite high world oil prices and a mild winter which cut back on heating oil demand, the division posted an operating profit of £3.1 million compared to £2.8 million in 2006, an increase of 11%. Total volumes on a like-for-like basis were unchanged at around 320 million litres, with extra diesel sales making up for the heating oils shortfall. Browns of Burwell, the fuel depot acquired in August 2006, was quickly assimilated into the operations, distributing 15 million litres in the period since acquisition and making a useful initial contribution to total operating profit. The fuel card marketing operation made further progress. Garden Centres Like for like, the four more established garden centres enjoyed a 10% uplift on sales compared to 2006. This would have been higher but for the disappointing weather in May, the busiest month for the entire industry. Woodford Park had a full year in the NWF fold, adding £6.1 million further turnover while Ashton Park, completed as a green field new build on time in March 2007, added a further £0.5 million sales. Total turnover for the division was 38% up, taking sales from £15.6 million last year to £21.5 million this year. Operating profits were 130% up at £0.7 million (2006: £0.3 million). Average margins were improved year-on-year and several new concessions were introduced at various sites. The new Gourmet food halls at two centres traded well and this concept will be extended to other sites. Accounting standards In accordance with the London Stock Exchange rules for AIM listed companies, we will be adopting new International Financial Reporting Standards (IFRS) in our financial statements for the 2007/08 financial year onwards. This will apply to our interim results due to be published in early 2008, which will also include an explanation of the effects of changing to IFRS from existing UK based standards at the date of transition (1 June 2006). Outlook for 2007/08 We are looking for further improvement in the new year. Distribution should benefit from the absence of last year's problems (major customer loss, start-up costs) while filling its new space. Feeds is expected to continue to grow its market share and benefit from further utilisation of blending capacity. Fuels will look to expand its geographic coverage even further and optimise operations within existing depot catchment areas. Garden Centres should enjoy the benefits of six large units with new buying and operations management while improving its offer and margins. I would like to add my own welcome to Richard Whiting, who will succeed me as Chief Executive in the first half of this new year. I would also like to thank all of my colleagues in NWF and the friends of NWF outside the Group who have been so supportive over the 12 years that we have been on AIM and who have together built up the business to its present scale and reputation. Graham Scott Chief Executive 14 August 2007 NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT Note 2007 2006 ---------- ---------- £'000 £'000 TURNOVER 1 320,365 292,873 COST OF SALES (293,492) (270,229) ---------- ---------- GROSS PROFIT 26,873 22,644 ADMINISTRATIVE EXPENSES (19,822) (15,922) ---------- ---------- OPERATING PROFIT 1 7,051 6,722 Interest payable (1,244) (1,088) Other finance costs - FRS17 69 (127) ---------- ---------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 5,876 5,507 Taxation on ordinary activities 2 (2,105) (1,958) ---------- ---------- PROFIT FOR THE FINANCIAL YEAR 3,771 3,549 ========== ========== Earnings per share Basic 3 41.2p 41.7p Diluted 3 40.4p 40.8p All of the Group's turnover is derived from continuing operations. NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED BALANCE SHEET 2007 2007 2006 2006 ------- -------- -------- -------- £'000 £'000 £'000 £'000 FIXED ASSETS Intangible assets 9,254 9,285 Tangible assets 44,296 25,005 -------- -------- 53,550 34,290 CURRENT ASSETS Stocks 8,063 7,094 Debtors 40,027 39,515 Cash and bank balances 66 945 ------- -------- 48,156 47,554 CREDITORS - Amounts falling due within one year(47,547) (34,646) ------- -------- NET CURRENT ASSETS 609 12,908 -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 54,159 47,198 CREDITORS - Amounts falling due after more than one year (20,077) (15,219) -------- -------- PROVISIONS FOR LIABILITIES AND CHARGES Deferred taxation (1,197) (1,112) -------- -------- NET ASSETS EXCLUDING PENSION LIABILITY 32,885 30,867 Pension liability (2,455) (3,223) -------- -------- NET ASSETS INCLUDING PENSION LIABILITY 30,430 27,644 ======== ======== CAPITAL AND RESERVES -------- -------- Equity share capital 2,286 2,285 Share premium 6,234 6,231 Revaluation reserve 1,396 1,421 Other reserves 302 302 Profit and loss account 20,212 17,405 -------- -------- TOTAL EQUITY SHAREHOLDERS' FUNDS 30,430 27,644 ======== ======== NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 CONSOLIDATED CASH FLOW STATEMENT Note 2007 2007 2006 2006 ------- ------- ------- ------- £'000 £'000 £'000 £'000 NET CASH INFLOW FROM 4 12,045 9,111 OPERATING ACTIVITIES RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid (1,617) (1,210) TAXATION Corporation tax paid (1,868) (1,598) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of tangible fixed assets (20,230) (2,822) Sale of tangible fixed assets 188 99 ------- ------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (20,042) (2,723) ACQUISITIONS AND DISPOSALS Acquisition of businesses (2,486) (3,050) Cash / (bank overdraft) acquired with businesses 847 (25) Deferred payment for businesses acquired in prior years (1,830) (1,030) Deferred receipt for business disposal in prior years 592 - ------- ------- NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS (2,877) (4,105) EQUITY DIVIDENDS PAID (1,673) (1,421) ------- ------- NET CASH OUTFLOW BEFORE FINANCING (16,032) (1,946) ------- ------- FINANCING Medium term loan received 5,972 2,000 Medium term loan repayments - 1,300) Hire purchase finance repayments (347) (161) Shares issued for cash consideration including premium 4 5,983 ------- ------- (DECREASE) / INCREASE IN CASH IN THE YEAR (10,403) 4,576 ======= ======= NWF GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2007 NOTES 1. SEGMENTAL INFORMATION Business Turnover Turnover Operating Operating Net Net operating operating profit profit assets assets 2007 2006 2007 2006 2007 2006 ---------- --------- --------- --------- --------- --------- -------- £'000 £'000 £'000 £'000 £'000 £'000 Distribution 26,985 27,226 1,411 2,072 26,267 11,737 Feeds 81,522 71,911 1,861 1,543 17,463 16,866 Fuels 190,402 178,151 3,126 2,823 7,771 8,674 Garden 21,456 15,585 653 284 14,891 12,046 Centres --------- --------- --------- --------- --------- -------- 320,365 292,873 7,051 6,722 66,392 49,323 ========== ========= ========= ========= ========= ========= ======== 2. TAXATION 2007 2006 -------- --------- £'000 £'000 -------- --------- UK Corporation tax at 30% (2006 - 30%) 1,961 1,819 Deferred tax charge - deferred tax provision 53 80 Deferred tax charge - FRS 17 deferred tax asset 35 - -------- --------- 2,049 1,899 -------- --------- Prior year - current tax charge / (credit) 50 (58) - deferred tax charge 6 117 -------- --------- Total tax charge 2,105 1,958 ======== ========= 3. EARNINGS PER SHARE The calculation of basic earnings per share is based on profit after tax for the financial year of £3,771,000 (2006: £3,549,000), divided by 9,142,000 ordinary shares being the weighted average number of ordinary shares in issue (2006 - 8,520,000). Earnings per ordinary share is adjusted to a fully diluted basis by adding to the weighted number of shares in issue in the calculation, the weighted average number of 193,000 (2006 - 169,000) dilutive ordinary shares in respect of outstanding share options. 4. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2007 2007 2006 2006 ------- -------- -------- -------- £'000 £'000 £'000 £'000 Operating profit 7,051 6,722 Goodwill amortisation 545 468 Depreciation charge 3,091 2,728 Profit on sale of tangible assets (97) (40) Increase in stocks (844) (1,014) Increase in debtors (677) (8,786) Increase in creditors 3,025 9,161 Difference between pension charge and cash contributions (49) (128) 1,455 (767) -------- -------- Net cash inflow from operating activities 12,045 9,111 ======== ======== 5. ANALYSIS OF NET DEBT At 31 May Cash flow Other At 31 May 2006 non-cash 2007 changes £'000 £'000 £'000 £'000 Cash and bank balances 945 (879) - 66 Bank overdraft (164) (9,524) - (9,688) -------------------------------------------------------------------------------- 781 (10,403) - (9,622) Hire purchase liabilities due within one year (248) 347 (409) (310) Debt due after one year (12,700) (5,972) - (18,672) Hire purchase liabilities due after one year (644) - (211) (855) -------------------------------------------------------------------------------- Total (12,811) (16,028) (620) (29,459) ================================================================================ 6. ACCOUNTING POLICIES The financial statements for the year ended 31 May 2007 have been prepared in accordance with applicable accounting standards, using the same principal accounting policies as set out in the Annual Report for the year ended 31 May 2006. 7. FINANCIAL CALENDAR Annual Report to be published 24 August 2007 Annual General Meeting 4 October 2007 Dividend: - ex-dividend date 22 August 2007 - record date 24 August 2007 - payment date 1 November 2007 8. ANNUAL REPORT This preliminary announcement does not constitute the Group's statutory accounts. The figures shown in this release have been extracted from the Group's full audited financial statements which, for the year ended 31 May 2006, have been delivered, and, for the year ended 31 May 2007 will be delivered, to the Registrar of Companies. Both carry an unqualified audit report. After 24 August 2007, copies of the Annual Report can be obtained from the Company's registered office at Wardle, Nantwich, Cheshire, CW5 6BP or viewed on the Company's Website: www.nwf.co.uk This information is provided by RNS The company news service from the London Stock Exchange OKNKNOBKDNFD

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